Santelli On Capital Flight And Bond Contagion

While it will be no surprise to any ZH reader (with our attention to Swiss 2Y rates) the world is undergoing a massive capital flight to safety. Rick Santelli gave this topic his special treatment today, pointing out that "capital is detouring - to avoid risk", and outlining just how big a 'crash' lower in yields we have seen among many of the supposedly safest sovereigns as money floods to safe-havens (including UK, US, Japan, Germany, and Holland). What is most important is that Rick outlines why we should care - when all around are yawning on about how cheap 'dividend' stocks must be given low interest rates - since it changes the nature of capital (the life-blood of our markets) from risk-taking to absolute safety-seeking - as he points out that "it isn't necessarily about our own economy's numbers, it isn't even about who we export to; it's the fact that if capital continues to get somewhat impaired, you'll have more data points as investors not only rethink about their capital but everybody rethinks everything in the capital structure that makes business go round."

I wish folks would calm down. For christ sake, you'd think CNBC has committed the unpardonable sin by not extolling the exact economic philosophy as Tyler. It's an entertainment show that contains (at times) interesting and oertinent data and market sentiment. I like the give and take between hosts (Rick is by far my fave) but you do get different points of view AND it's the only place besides FOX that dares speak ill of POTUS.

SOme folks have some real issues if they get worked up to fever pitch over a damn TV show.

dividend paying stocks offer safety. as long as you ignore the potential for 50%+ losses on capital just to get the whopping 3% yield. and the inevitable cancellation of that 3% yield when things get bad.

The black hole begins....more and more 'investors' move closer to the event horizon to avoid the outer risk chaos....or more and more sheeple head to the big opium den in the city to avoid the outlying gang wars in the burbs....the only way is down, either way

I recall that Rogoff/Reinhart study saying that about 3 years after a banking crisis you have the sovereign debt crisis....hmmm....are we there yet? You can hear the supports creaking as the stress overwhelms the duct tape holding this together.

If this rigged market does fall apart it will be wild. All the pension funds, government services, everything will be destroyed. That is why it can't happen!!! Bernanke et al won't let it!!

I have cash. I want to invest it. I've looked at my local real estate and can't find anything that is priced at what I consider its economic vale. I'm not in the market. I'm not going to buy bonds for any duration and short term stuff is irrelvant. Seriously ... I'm thinking that I'll lose less money sitting out by my pool this summer than anything else I can do.